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Consumer Behavior

The Dangerous Allure of 'Free' Gifts

In purchasing, we are at the mercy of feelings as reason takes a back seat.

There are few genuinely free gifts and marketers often dangle them before unwary shoppers. The belief in getting something for nothing is a compelling illusion that boosts shopping.

Free Gifts in Nature

The ploy of offering something seemingly for nothing is not peculiar to our species but crops up repeatedly in the animal world, where it is often deployed in very nasty ways.

The angler fish offers its targets an appealing snack only to make them the meal when they attempt to snatch the lure.

Fireflies have species typical flashing patterns. The femme fatale firefly mimics the patterns of another species to offer them a mating opportunity. When the targets attempt copulation, they are eaten by the predatory female.

According to French sociologist/anthropologist Marcel Mauss, gift-giving is a universal feature of human societies. Mauss believed that a gift always incurred an obligation to reciprocate. He felt that gift-givers always sought to establish social bonds, and social obligations because the recipient was beholden to the giver.

In subsistence societies, the gift was always associated with the giver and the associated opening of an obligation meant that gifts were never truly free. In the more anonymous world of marketing, the gift is separated from the giver so that a free gift is at least theoretically possible.

Even so, it is wise to be skeptical of free gifts from marketers who strive to bamboozle prospective customers.

Marketing Schemes

The first step in free-gift marketing is not to give something for nothing – that is not a viable business model — but to convince future customers that they are getting something for nothing.

Retailers go to great lengths to create the illusion that customers are getting something for nothing. Many supermarkets run rewards programs that apparently give regular customers a discount on their purchases.

What is less obvious is that the prices of relevant items are raised in advance of the discount. Even worse, data on their buying behavior can be collected for use in subsequent (undisclosed) marketing schemes (possibly run by third parties).

Some coffee shops give the tenth cup of coffee for free. What is less obvious is that if a person buys ten cups of coffee at the same place, they have likely built up a habit of going there and become less likely to go elsewhere.

The sale where everything is half-off uses the now familiar ploy of raising the prices in order to lower them. Buyers who are not up to speed on the retail prices of the products (which includes most of us) often come away with the impression that they have really gotten a tremendous bargain at the “clearance sale” (as though retailers do not want to “clear” merchandise every day of the year).

One of the most effective free-gift schemes in history is the McDonald's happy meal in which children receive a plastic toy with their Happy Meal. This was a brilliant scheme because the real benefit was that it distracted children long enough for their parents to eat. Unfortunately, it is being phased out due to environmental concerns about all that plastic.

While many “free-gift” schemes are relatively simple, they can also be quite effective and the underlying reasons tell us a great deal about human decision-making mechanisms.

Why These Schemes Work

Buying is a decision-making process that differs little from other human decisions. In other words, it is ruled by emotion. We are strongly motivated to do what makes us feel good and avoid what makes us feel bad.

A free gift of any kind makes us feel good and we prefer transactions having that effect and feeling good motivates impulsive shopping. Habitual patrons of discount stores find themselves filling a cart with inexpensive items that they had not needed but bought anyway because the bargains seemed too good to pass up.

Buyer remorse may well emerge later as the unwanted items pile up on storage shelves.

Such buying occurs because it made the shopper feel good at the point of purchase. Such emotion-driven decisions are rapid and that is why our purchases are not always as rational as we would wish.

Feeling Good About a Deal

While some free gifts boost sales, this is only true if the gift itself is perceived as valuable. In this vein, free gifts are less effective at goosing sales than price cuts of equivalent value.

So far as price cuts are concerned, consumers prefer buy-one-get-one-free to equivalent price reduction. This may be because we are aware of how easily merchants can manipulate the initial price so as to provide deceptive discounts.

The popularity of the two-for-one deal may be because it seems like an unambiguous bargain. After all, one is getting twice the value for the same money.

Of course, the value proposition is not always simple and two pairs of out-of-fashion shoes have no real value if they are never worn.

Nevertheless, it is easy to feel good about getting twice the product for the same amount of money. Smaller discounts also appeal to impulsive shoppers. After all, a person might reason that if they are getting a 20 percent discount on a sale item, it would be foolish not to take advantage of a deal that will be gone next week.

Marketing is one of the few areas of our lives where a gift can be truly free, at least in theory. The same can rarely be said of a valuable gift from a relative, acquaintance, or friend that incurs long-term obligation. 'Free' feels good and gins up sales.

More from Nigel Barber Ph.D.
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